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Investigations

Tennessee Construction Company Settles Allegations of DBE Fraud

On May 16, 2016, Mountain States Contractors, LLC, a subsidiary of Jones Brothers, agreed to pay the United States more than $2,250,000 to settle False Claims Act (FCA) allegations in the Middle District of Tennessee. The settlement resolves a civil investigation of Mountain States and affiliated companies for submitting false claims for payment to the United States in connection DOT’s Disadvantaged Business Enterprise (DBE) program.

The investigation found that Mountain States and its affiliated company, HMA, as the prime contractors on federally funded construction projects, agreed that they would use DBEs to perform subcontracted work. For a number of these projects, Mountain States and HMA subcontracted with G&M Associates. Although G&M Associates is a certified DBE, evidence obtained during the investigation indicated that Mountain States improperly “loaned” its employees to G&M to perform the DBE work on the projects. The entities claimed these employees as DBE employees for purposes of obtaining payment for their work despite the fact that the prime contractors continued to provide their health insurance. The prime contractors also improperly leased equipment to G&M, which the entities then counted against the projects’ DBE goals.

These allegations were originally raised in a lawsuit filed against Mountain States by a former Mountain States employee who brought his claims under the FCA’s qui tam, or whistle blower, provisions, which allow private citizens with knowledge of false claims to bring civil suits on behalf of the Government and share in any recovery. The whistle blower will receive over $405,000 as his share of the settlement.

In addition to the settlement, Mountain States will enter into a monitoring agreement with the Federal Highway Administration. This agreement will help to prevent similar conduct in the future.